Amazon just pulled off the corporate equivalent of stealing someone’s ex – and it’s worth $38 billion.
Amazon Web Services (AWS) inked a seven-year deal with OpenAI, the masterminds behind ChatGPT. Amazon stock jumped 5% faster than you can say “artificial intelligence.”
The Deal That Made Wall Street Do a Double-Take
This isn’t just any partnership – it’s a $38 billion commitment. OpenAI needs massive computing power to run ChatGPT for millions of users. Amazon’s AWS has the infrastructure with hundreds of thousands of Nvidia GPU chips.
The Numbers Game
Why analysts are excited:
• $38 billion over 7 years = roughly $5.5 billion per year for Amazon
• AWS currently makes about $33 billion quarterly, so this adds a 4% boost
• With AWS’s 35% profit margins, that’s about $1.9 billion in extra earnings annually
Plot Twist: Microsoft Loses Exclusive Status
Microsoft used to be OpenAI’s exclusive cloud provider. Now Amazon crashed the party, and Microsoft’s competitive advantage just got less advantageous.
Wedbush boosted their price target to $340 per share – about 34% higher than current trading levels.
What This Means for Your Money
Amazon stock has gained 16% this year. After jumping 10% on earnings and another 5% on this deal, it’s having quite the moment. At 28 times forward earnings, it’s not bargain-bin pricing, but you’re getting a front-row seat to the AI revolution.
The median price target sits at $290 per share, suggesting room to run. Amazon didn’t just make a deal; they made a statement about their place in the AI game.